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AT&T sued by poor man's Formula 1

NASCAR prefers Nextel

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Eager to promote its re-branded wireless network, AT&T has upped the ante in a legal battle with NASCAR, the American auto racing association inspired by the law-defying exploits of hard-driving whiskey bootleggers. Yesterday, in Atlanta, Georgia, NASCAR filed a $100m suit against AT&T, decrying the company's sponsorship deal with stock car speedster Jeff Burton; and this morning, AT&T responded by extending the deal for another three years.

NASCAR's premier racing series is sponsored by Nextel, an AT&T rival. In 2004, when NASCAR signed its $700m Nextel agreement, Jeff Burton and his Richard Childress Racing Team had an existing deal with Cingular, and NASCAR officials gave a free pass to the enormous Cingular sponsorship logos painted on Burton’s No. 31 car. But after AT&T's recent acquisition of Cingular, NASCAR wouldn't allow Burton to change the logos.

In March, AT&T sued NASCAR, and a U.S. District Judge issued a preliminary injunction that gave the go-ahead to a new paint job. Yesterday, NASCAR counter-sued, claiming that the paint job was a $100m slap-in-the-face. "Cingular's refusal to follow NASCAR rules and accept NASCAR's denial of this paint scheme [has] undermined NASCAR's authority as the sanctioning body of stock car auto racing," said the suit. But a day later, Burton and AT&T announced a three-year extension to their marketing agreement.

"As long-time supporters of racing and its fans, we are very pleased to continue our involvement with the sport as a team sponsor in the wireless category," read a statement from Dave Garver, executive director of high growth segments and sponsorships for the wireless division at AT&T. "We’re looking ahead, planning even more engaging ways to bring the latest in wireless technology to fans."

This sort of sponsorship row is common in the world of sport. "It happens all the time," explains Ethan Horwitz, an intellectual property lawyer with the international firm King & Spalding. "It not unusual to have, say, a ballpark that’s sponsored by Coke and a guy on the team that’s sponsored by Pepsi."

But it is unusual for such a disagreement to reach the courts. "Coke and Pepsi long ago learned how to work these things out," Horwitz says. "The beer companies have learned. The Nikes and Adidases have learned. But the parties in this case still have some learning to do."®